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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

ENERGY DIVISION RESOLUTION E-3754 August 2, 2001

RESOLUTION

By Advice Letter 1286-E Filed on January 16, 2001.

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SUMMARY

This resolution denies SDG&E authorization to transfer the unrefunded balance of the Electric Deferred Refund Account to its Transition Cost Balancing Account. To assure that the future refunds are made under the same allocation as collected, the funds should remain in the EDRA account until the next refund.

SDG&E can carry the $329,642 plus interest in its EDRA from which refunds will be allocated as specified by SDG&E's tariffs.

BACKGROUND

By Advice Letter 1286-E, SDG&E seeks Commission approval to transfer the year-end 2000 balance in its Electric Deferred Refund Account (EDRA) to its Transition Cost Balancing Account (TCBA).

In Decision (D.) 96-12-025, the Commission established the EDRA for the three major California electric utilities, including SDG&E, to ensure that disallowances and certain refunds would be credited to electric customers directly rather than be used simply as an offset to electric transition costs. The Commission ordered that refunds be made annually and be returned to customers in accordance with a refund plan to be filed by advice letter on or before January 31 of the succeeding year.

At the end of 1998, SDG&E's EDRA consisted of an electric rate overcollection from June 1998, a transmission services refund from Southern California Edison Company, and a refund from Post-Retirement Benefits Other than Pensions. As authorized by Commission Resolution E-3603, dated July 8, 1999, during March 2000 SDG&E refunded to its eligible electric customers $2,395,286.11 out of the $2,696,973 available for refund that had been collected in its EDRA during 1998. This left an unrefunded balance of $301,686.89. In a letter to the Energy Division Director dated May 4, 2000, SDG&E indicated that it intended to include the unrefunded balance in its next EDRA refund plan.

As of December 31, 2000 the balance in the EDRA, including accrued interest, was only $329,642. SDG&E believes that the intent of any refunds from the EDRA be "practical" and also believes that refunding $329,642, plus any additional interest that might accrue prior to the time of the refund, at a cost of approximately $100,000, hardly seems practical. The refund to each residential customer would only be about 13 cents.

Although the EDRA required that SDG&E file a refund plan on or before January 31, 2001, to refund the balance in its EDRA at the end of 2000, based on the information above, and the magnitude of the dollars to be refunded, SDG&E requests that it be allowed to transfer the $329,642 into its TCBA. If the requested transfer to the TCBA will not be authorized, then SDG&E requests that it be allowed to continue to carry the balance in the EDRA for inclusion in a future refund, rather than file a refund plan by January 31, 20011 as currently required by the EDRA.

SDG&E proposes that the amount transferred to the TCBA be allocated between customers paying Assembly Bill (AB) 265 rates and those customers above 100 kW who are not subject to AB 265, approximately 60% and 40%, respectively. The portion allocated to customers who are covered by AB 265 would be recorded in the Energy Rate Ceiling Revenue Shortfall (ERCRS) subaccount, while the non-AB 265 portion would be recorded separately for customers above 100 kW. This treatment is the same as proposed in other recent advice letters where SDG&E proposed to transfer certain balancing account over-collections to the TCBA.

NOTICE

Notice of Advice Letter 1284-E was made by publication in the Commission's Daily Calendar. SDG&E states that a copy of the Advice Letter was mailed and distributed in accordance with Section III-G of General Order 96-A.

PROTESTS

No protests were filed.

DISCUSSION

SDG&E proposes to allocate amounts transferred to the TCBA between customers paying AB 265 rates and those customers above 100 kilowatts who are not subject to AB 265 by 60% and 40% respectively.2 D.99-06-058 states:

"...SDG&E shall credit each customer group a share of overcollections using the same cost allocation method used to collect the revenues in rates..."(slip opinion p 48)

SDG&E's Preliminary Statement, Section VI.D.2 states:

"The balance in the ERDA shall be returned to customers through an annual refund based on each customer's average monthly energy usage for each calendar period."

SDG&E has not shown that its proposed 60/40 allocation method conforms to the allocation required by D.99-06-058. The $329,6423 should remain in the EDRA and be allocated with the next refund as specified by SDG&E's tariffs. We will grant SDG&E's second proposal to carry the ERDA refundable balance in the EDRA so that allocation of the refund will approximate the allocation as originally collected.

COMMENTS

Rule 77.7(f)(9) requires a 30-day period for review before the Commission acts on a resolution. The Chief Administrative Law Judge's Ruling Shortening Time on SDG&E's Motion for Implementation of the Memorandum of Understanding states:

1. "The time to file a response to San Diego Gas & Electric Company's (SDG&E) July 16, 2001 motion for implementation of the Memorandum of Understanding with the State of California shall be shortened to July 27, 2001." Ref. p 3. A.00-10-045, A.00-01-044."

This resolution is required to meet the schedule in A.00-10-045/00-01-044. Action on this Advice Letter is necessary by August 2, 2001. Delay of this resolution would result in significantly more harm to public welfare than holding to the 30-day review period. We will shorten the 30-day review period to accommodate the schedule of this and other resolutions to be acted on today. Comments were filed by ________ on _________.

FINDINGS

1. The ERDA requires that SDG&E file a file a refund plan by January 31, 2001.

2. SDG&E filed Advice Letter 1286-E requesting to transfer the unrefunded balance of $329,642 from its EDRA to its TCBA.

3. SDG&E refunded most of the balance in its EDRA leaving $329,642, a balance too small to refund.

4. SDG&E seeks authority to place the $329,642 into its TCBA.

5. Since the allocation proposed by SDG&E does not comport to that required by D.99-06-058, it is reasonable to deny SDG&E the authority to allocate refunds between customers paying AB 265 rates and those customers above 100 kilowatts who are not subject to AB 265 by 60% and 40% respectively.

6. SDG&E should carry the $329,642 in its EDRA for inclusion with a future refund.

7. We have balanced the public interest in avoiding the possible harm to public welfare flowing from delay in considering this resolution against the public interest in having the full 30-day period for review and comment as required by Rule 77.7(f)(9). We conclude that the former outweighs the latter. We conclude that failure to adopt a decision before the expiration of the 30-day review and comment period would cause significant harm to the public welfare.

THEREFORE IT IS ORDERED THAT:

1. SDG&E's request to transfer $329,642 in remaining funds from its EDRA to its TCBA is denied.

2. SDG&E shall carry the $329,642 remaining funds in its EDRA for inclusion with a future refund.

This Resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed and adopted at a conference of the Public Utilities Commission of the State of California held on August 2, 2001; the following Commissioners voting favorably thereon:

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1 SDG&E filed Advice Letter 1286-E on January 16, 2001, 15 days before the refund plan was due. SDG&E took no action since the advice letter was pending.

2 SDG&E estimates these percentages based on the approximate share of the capped customers' kilowatt-hour load to total load using the latest load forecast to 2003.

3 SDG&E estimates that $100,000 in interest will accrue prior to the next refund.

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